S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7413
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                                May 1, 2019
                                ___________
 
 Introduced  by M. of A. STECK -- read once and referred to the Committee
   on Governmental Employees
 
 AN ACT to amend the retirement and social security  law,  the  education
   law  and  the administrative code of the city of New York, in relation
   to providing cost-of-living adjustments

   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. Subdivision c of section 78-a of the retirement and social
 security law, as added by chapter 125 of the laws of 2000, is amended to
 read as follows:
   c. Said cost-of-living adjustment shall be computed on a base  benefit
 amount  not to exceed eighteen thousand dollars of the annual retirement
 allowance defined in subdivision b of this section.   EFFECTIVE  ON  THE
 FIRST DAY OF SEPTEMBER, TWO THOUSAND TWENTY, SAID COST-OF-LIVING ADJUST-
 MENT SHALL BE COMPUTED ON A BASE BENEFIT AMOUNT NOT TO EXCEED TWENTY-ONE
 THOUSAND  DOLLARS OF THE ANNUAL RETIREMENT ALLOWANCE DEFINED IN SUBDIVI-
 SION B OF THIS SECTION.
   § 2. Subdivision c of section 378-a of the retirement and social secu-
 rity law, as added by chapter 125 of the laws of  2000,  is  amended  to
 read as follows:
   c.  Said cost-of-living adjustment shall be computed on a base benefit
 amount not to exceed eighteen thousand dollars of the annual  retirement
 allowance  defined  in  subdivision b of this section.  EFFECTIVE ON THE
 FIRST DAY OF SEPTEMBER, TWO THOUSAND TWENTY, SAID COST-OF-LIVING ADJUST-
 MENT SHALL BE COMPUTED ON A BASE BENEFIT AMOUNT NOT TO EXCEED TWENTY-ONE
 THOUSAND DOLLARS OF THE ANNUAL RETIREMENT ALLOWANCE DEFINED IN  SUBDIVI-
 SION B OF THIS SECTION.
   §  3. Subdivision c of section 532-a of the education law, as added by
 chapter 125 of the laws of 2000, is amended to read as follows:
   c. Said cost-of-living adjustment shall be computed on a base  benefit
 amount  not to exceed eighteen thousand dollars of the annual retirement
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD03565-02-9

 A. 7413                             2
 
 allowance defined in subdivision b of this section.   EFFECTIVE  ON  THE
 FIRST DAY OF SEPTEMBER, TWO THOUSAND TWENTY, SAID COST-OF-LIVING ADJUST-
 MENT SHALL BE COMPUTED ON A BASE BENEFIT AMOUNT NOT TO EXCEED TWENTY-ONE
 THOUSAND  DOLLARS OF THE ANNUAL RETIREMENT ALLOWANCE DEFINED IN SUBDIVI-
 SION B OF THIS SECTION.
   § 4. Subdivision c of section 13-696 of the administrative code of the
 city of New York, as added by chapter  125  of  the  laws  of  2000,  is
 amended to read as follows:
   c.  Said cost-of-living adjustment shall be computed on a base benefit
 amount not to exceed eighteen  thousand  dollars  of  the  annual  fixed
 retirement  allowance  defined in subdivision b of this section.  EFFEC-
 TIVE ON THE FIRST DAY OF SEPTEMBER, TWO THOUSAND TWENTY,  SAID  COST-OF-
 LIVING  ADJUSTMENT  SHALL  BE  COMPUTED  ON A BASE BENEFIT AMOUNT NOT TO
 EXCEED TWENTY-ONE THOUSAND DOLLARS OF THE  ANNUAL  RETIREMENT  ALLOWANCE
 DEFINED IN SUBDIVISION B OF THIS SECTION.
   § 5. This act shall take effect immediately.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill would amend subdivision c of Section 532-a of the Education
 Law to prospectively apply the cost-of-living adjustment (COLA) percent-
 age to a base benefit amount not to exceed $21,000 of the annual retire-
 ment allowance. The current cap on the annual  base  benefit  amount  is
 $18,000. This benefit improvement would be effective in September 2020.
   The  annual  cost  to  the  employers of members of the New York State
 Teachers' Retirement System for this benefit is estimated  to  be  $85.8
 million or .50% of payroll if this bill is enacted.
   Member  data  is  from  the  System's  most recent actuarial valuation
 files, consisting of data provided by the employers  to  the  Retirement
 System.   Data distributions and statistics can be found in the System's
 Comprehensive Annual Financial  Report  (CAFR).  System  assets  are  as
 reported  in the System's financial statements, and can also be found in
 the CAFR. Actuarial assumptions and methods are provided in the System's
 Actuarial Valuation Report.
   The source of this estimate is Fiscal Note 2019-13 dated  January  24,
 2019  prepared by the Actuary of the New York State Teachers' Retirement
 System and is intended for use only during the 2019 Legislative Session.
 I, Richard A. Young, am the Actuary for the  New  York  State  Teachers'
 Retirement  System.  I  am a member of the American Academy of Actuaries
 and I meet the Qualification Standards of the American Academy of  Actu-
 aries to render the actuarial opinion contained herein.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   This  bill  would  provide an increase in the defined benefit cost-of-
 living adjustment (COLA) for New York public retirement systems.  Start-
 ing with a payment in September 2020 the annual cost of  living  adjust-
 ment will be computed on a base benefit amount not to exceed $21,000.
   Insofar  as  this bill affects the New York State and Local Employees'
 Retirement System, pursuant to Section 25 of the Retirement  and  Social
 Security  Law,  the increased costs would be borne entirely by the State
 of New York and would require an itemized  appropriation  sufficient  to
 pay  the  cost of the provision. If this bill were enacted, the increase
 in the present value of benefits would be approximately $1.07 billion.
   Insofar as this bill affects the New York State and Local  Police  and
 Fire  Retirement  System  (PFRS), the increased costs would be shared by
 the State of New York and the participating employers in  the  PFRS.  If
 this  bill  were  enacted, the increase in the present value of benefits
 would be approximately $143 million. The estimated first year cost would

 A. 7413                             3
 
 be approximately $3.5 million to the State of New York and approximately
 $13.7 million to the participating employers in the PFRS.
   Summary of relevant resources:
   The  membership  data  used  in  measuring  the impact of the proposed
 change was the same as that used in the March 31, 2018  actuarial  valu-
 ation.    Distributions  and  other  statistics can be found in the 2018
 Report of the  Actuary  and  the  2018  Comprehensive  Annual  Financial
 Report.
   The  actuarial assumptions and methods used are described in the 2015,
 2016, 2017 and 2018  Annual  Report  to  the  Comptroller  on  Actuarial
 Assumptions,  and  the  Codes  Rules and Regulations of the State of New
 York: Audit and Control.
   The Market Assets and GASB Disclosures are found in the March 31, 2018
 New York State and Local  Retirement  System  Financial  Statements  and
 Supplementary Information.
   I am a member of the American Academy of Actuaries and meet the Quali-
 fication Standards to render the actuarial opinion contained herein.
   This  fiscal note does not constitute a legal opinion on the viability
 of the proposed change nor is it intended to serve as a  substitute  for
 the professional judgment of an attorney.
   This estimate, dated January 9, 2019, and intended for use only during
 the  2019  Legislative  Session, is Fiscal Note No. 2019-10, prepared by
 the Actuary for the New York State and Local Retirement System.
   FISCAL NOTE.--Pursuant to Legislative Law, Section 50:
   SUMMARY OF BILL: This proposed legislation would amend the City of New
 York's (City) Cost of Living Adjustment (COLA) provision in 13-696(c) to
 raise the base retirement allowance benefit cap  amount,  used  for  the
 COLA calculation, from $18,000 to $21,000.
   This  proposed  legislation  would impact the New York City Employees'
 Retirement System (NYCERS),  the  New  York  City  Teachers'  Retirement
 System  (NYCTRS), the New York City Board of Education Retirement System
 (BERS), the New York City Police Pension Fund (POLICE), and the New York
 City Fire Pension Fund (FIRE), collectively known as the New  York  City
 Pension Funds and Retirement Systems (NYCRS).
   Effective  Date:  Upon  enactment and applicable to the September 2020
 COLA.
   IMPACT ON BENEFITS:  Certain  NYCRS  retirees  and  beneficiaries  are
 eligible  to  receive  a COLA pursuant to the Administrative Code of the
 City of New York (ACCNY) Section 13-696(a) (i.e. age 62 and retired  for
 5  years;  age  55  and  retired for 10 years; disabled retirees who are
 retired for 5 years; and accidental death benefit  recipients  who  have
 been receiving the benefit for 5 years).
   Currently,  COLA  is  50%  of the Consumer Price Index, rounded to the
 next higher 0.1%, but not to exceed 3% and not less then 1%, applied  to
 the  first  $18,000 of the maximum retirement allowance as adjusted with
 prior COLAs.
   Spouses paid under a lifetime optional benefit receive 50% of the COLA
 that would have been payable to the retiree.
   Under the proposed legislation, if enacted, the COLA percentage  would
 be applied to the first $21,000 of the maximum retirement allowance.
   FINANCIAL  IMPACT:  The  estimated  financial impact of increasing the
 base retirement allowance benefit cap amount, used for the  COLA  calcu-
 lation  as described above is an increase in the Present Value of Future
 Benefits (PVFB) of $1.2 billion and an increase in the  annual  employer
 contributions  of $839.6 million. A breakdown of the financial impact by
 NYCRS is shown in the table below.

 A. 7413                             4
 
                          Additional                Estimated First Year
 System/Fund         Present Value of Future          Annual Employer
                       Benefits($ Millions)        Contributions ($Millions)
 NYCERS                      $489.1                       $399.0
 NYCTRS                       343.2                        237.3
 BERS                          25.9                         14.1
 POLICE                       229.5                        189.3
 FIRE                          75.8                        59.9
   Total                     $1,163.5                      $839.6
   In  accordance  with ACCNY Section 13-638.2(k-2), new Unfunded Accrued
 Liability (UAL) attributable to benefit changes are to be  amortized  as
 determined by the Actuary but generally over the remaining working life-
 time  of  those  impacted  by  the benefit changes. For purposes of this
 Fiscal Note it has been assumed that increases in the  UAL  attributable
 to  current  retirees would be recognized immediately and that increases
 in the UAL attributable to active members would be amortized over  peri-
 ods  ranging  from  12  to  15  years  depending on the System (11 to 14
 payments under the One-Year Lag Methodology (OYLM)).
   OTHER COSTS: Not measured in this Fiscal Note are the following:
   * The initial, additional administrative costs of NYCRS and other  New
 York City agencies to implement the proposed legislation.
   CONTRIBUTION  TIMING:  For  the  purposes  of  this Fiscal Note, it is
 assumed that the  changes  in  the  Present  Value  of  future  employer
 contributions  and  annual employer contributions would be reflected for
 the first time in the June 30, 2018 actuarial valuations  of  NYCRS.  In
 accordance  with  the OYLM used to determine employer contributions, the
 increase in employer contributions would first be  reflected  in  Fiscal
 Year 2020.
   CENSUS  DATA:  The  estimates presented herein are based on the census
 data used in the Preliminary June 30, 2018 (Lag) actuarial valuations of
 NYCRS to determine the Preliminary Fiscal Year  2020  employer  contrib-
 utions.
   ACTUARIAL ASSUMPTIONS AND METHODS: The changes in the Present Value of
 future   employer   contributions   and  annual  employer  contributions
 presented herein have been calculated based on the actuarial assumptions
 and methods in effect for the June 30, 2018 (Lag)  actuarial  valuations
 used  to  determine  the  Preliminary Fiscal Year 2020 employer contrib-
 utions of NYCRS.
   RISK AND UNCERTAINTY: The costs presented in this Fiscal  Note  depend
 highly  on the actuarial assumptions and methods used and are subject to
 change based on the realization of  potential  investment,  demographic,
 contribution,  and other risks. If actual experience deviates from actu-
 arial assumptions, the actual costs could differ  from  those  presented
 herein.  Costs  are  also  dependent  on the actuarial methods used, and
 therefore different actuarial methods could produce  different  results.
 Quantifying these risks is beyond the scope of this Fiscal Note.
   STATEMENT  OF ACTUARIAL OPINION: I, Sherry S. Chan, am the Chief Actu-
 ary for, and independent of, the New York City  Retirement  Systems  and
 Pension  Funds.  I  am a Fellow of the Society of Actuaries, an Enrolled
 Actuary under the Employee Retirement Income and Security Act of 1974, a
 Member of the American Academy of Actuaries, and a Fellow of the Confer-
 ence of Consulting Actuaries. I meet the Qualification Standards of  the
 American  Academy of Actuaries to render the actuarial opinion contained
 herein. To the best of my knowledge, the results contained  herein  have
 been prepared in accordance with generally accepted actuarial principles

 A. 7413                             5
 
 and  procedures  and  with the Actuarial Standards of Practice issued by
 the Actuarial Standards Board.
   FISCAL  NOTE  IDENTIFICATION: This Fiscal Note 2019-10 dated April 23,
 2019 was prepared by the Chief Actuary for the New York City  Employees'
 Retirement  System,  the  New York City Teachers' Retirement System, the
 New York City Board of Education Retirement System, the  New  York  City
 Police Pension Fund, and the New York City Fire Pension Fund. This esti-
 mate is intended for use only during the 2019 Legislative Session.